India's Manufacturing Activity Surges in October Driven by Strong Domestic Demand

Economy

Updated on 03 Nov 2025, 05:13 am

Reviewed By

Aditi Singh | Whalesbook News Team

Short Description :

India's manufacturing sector showed robust growth in October, with the HSBC India Manufacturing Purchasing Managers' Index rising to 59.2. This expansion was primarily fueled by strong domestic demand, which offset a slowdown in export orders, which grew at their slowest pace in 10 months. Production output reached its strongest pace in five years, driven by factors like efficiency improvements and new clients. While input costs eased, manufacturers passed on higher freight and labor costs, leading to persistent output charge inflation.

India's Manufacturing Activity Surges in October Driven by Strong Domestic Demand

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Detailed Coverage :

India's manufacturing sector experienced a significant acceleration in activity during October, as indicated by the HSBC India Manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global. The PMI climbed to 59.2 in October from 57.7 in September, surpassing preliminary estimates. A reading above 50.0 signifies expansion. Output growth intensified, matching the joint-strongest pace seen in five years, primarily driven by robust domestic demand, improved efficiency, securing new clients, and investments in technology. However, growth in international sales weakened, with new export orders increasing at the slowest rate in ten months, although the overall growth remained substantial. Despite a decrease in input cost inflation to an eight-month low, output charge inflation remained high for the second consecutive month, reaching its highest level in nearly 12 years. Manufacturers reported passing on increased freight and labor costs to consumers, with strong demand enabling them to sustain elevated prices. Employment saw a moderate increase for the 20th consecutive month to manage higher workloads. Business optimism for future output slightly declined from its September peak but remained strong, with positive expectations stemming from Goods and Services Tax (GST) reform and healthy demand.

Impact This news is highly positive for the Indian economy, indicating strong domestic consumption and industrial output. It suggests resilience in the face of global economic slowdowns and can lead to increased corporate earnings for manufacturing companies. This could translate into positive investor sentiment and potentially boost stock prices in the manufacturing and related sectors. Rating: 8/10.

Difficult Terms Explained: Purchasing Managers' Index (PMI): A survey-based economic indicator that provides an early indication of the economic health of a particular sector. A PMI reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction. Input Cost Inflation: The rate at which the prices of raw materials and components used in production increase. Output Charge Inflation: The rate at which the prices of finished goods and services sold by manufacturers increase. Goods and Services Tax (GST): A consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. In India, it replaced multiple indirect taxes.